October 3, 2025Open Access

The Influence Of The Wajar (Mandatory Education) Program On The Unemployment Rate In Indonesia

Key Points

Gross Enrollment Rate at Junior High School significantly increases the unemployment rate, indicating potential challenges in educational outcomes.
The Gross Enrollment Rate at Senior High School has a notable negative effect on the unemployment rate, highlighting the importance of further education.
Literacy Rate and Mean Years of School positively correlate with lower unemployment rates, suggesting the value of educational attainment.
Variable interactions with the Provincial Minimum Wage exhibit complex influences on unemployment, underlining the need for nuanced policy approaches.

Abstract

This study aims to identify the effect of Gross Enrollment Rate (GER) at Junior High School (JHS) and Senior High School (SHS), Literacy Rate (LTR), Mean Years of School (MYS), Human Development Index (HDI), and Provincial Minimum Wage (PMW) on the Open Unemployment Rate (OUR) in 34 Provinces of Indonesia in 2005-2024. The estimation results using the Generalized Method of Moment (GMM) panel show that GERJHS has a positive and significant effect on the unemployment rate (OUR), while the GERSHS has a negative and significant effect on the unemployment rate. For other variables such as LTR and MYS have a negative and significant effect on the unemployment rate. The HDI variable has a positive and significant effect, while the PMW variable has two significant effects, namely positive and negative on the unemployment rate. These findings can provide a reference for policy makers to improve the compulsory education program (Wajar) both in terms of duration, quantity and quality of implementation so that it can continue to reduce the unemployment rate in Indonesia.

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